Exit strategies for covered call writing includes closing a trade when share price rises above the original strike price sold. When formulating these decisions, we must factor in the cost-to-close as it relates to the opportunity to generate more profit. On November 8, 2017, Marion shared with me a trade with Activision Blizzard, Inc. (NASDAQ: […]
Position Management in the Final Week of a Contract: A Real-Life Example with FIVE
Exit strategy preparation and implementation is one of the 3 required skills for successful covered call writing and put-selling. Because of the time value erosion of our options (Theta), there are limitations regarding the exit strategy opportunities as our contracts near expiration. In January 2018, Duminda contacted me about a trade he executed with Five […]
Ask Alan 149 – How to Structure Portfolio Strikes
Alan answers a question posed by Peter, who asks: Wouldn’t it be more accurate to use a portfolio average for ROO, upside and downside instead of straight calculations for each stock? Thanks, Peter ——— It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#149, “How to Structure Portfolio Strikes” […]
Evaluating the Success of our Covered Call Trades
Whenever a covered call trade results in a maximum return, it is a successful trade…period…end of story. To most, this statement appears nonsensical and self-evident. But I’m here to tell you that there are a lot of covered call writers that question that success. In late December 2017, Paul shared with me a series of […]
Understanding the Impact Implied Volatility has on Delta
For covered call writers and put-sellers, the option Greeks play a major role in our understanding of the risks and value of our option premiums. We know our option premiums consist of intrinsic value (for in-the-money strikes) + time value. Our initial time value returns reflect the time to expiration + the volatility of the […]
Is There Less Risk Using Deep In-The-Money Long Calls versus Covered Call Writing?
“There is less risk using deep in-the-money (ITM) long calls than buying stock and selling the corresponding short calls”. That is the case John made to me when I received his email in January 2018. As an example, John used a $100.00 stock and a call premium of $9.00. The basis of his theory was […]
Rolling Down Our Put Positions: When and Why?
Rolling Down Our Put Positions: When and Why? When selling cash-secured puts, our breakeven stock price is the (out-of-the-money) strike price less the put premium. Our exit strategy guideline as to when to close the short put (buy back the put) is when share value declines to more than 3% below the strike price. […]
Evaluating a Portfolio from a Numerical Perspective
When we formulate our covered call writing and put-selling portfolios, we are basing our decisions on non-emotional sound fundamental, technical and common sense principles. Similarly, we can analyze a portfolio and determine the investor’s stock and overall market assessments. On November 17, 2017, Carl sent me a list of his very first covered call writing […]
American Depository Receipts and Special 1-Time Cash Dividends/ Discount Coupons for New Book & Calculators
When viewing option chains while crafting our covered call writing portfolios, from time-to-time we will see unusual strike prices. These anomalies are usually associated with various corporate events that result in option contract adjustments. Such events include stock splits, mergers and acquisitions and the one highlighted in this article, special 1-time cash dividends. In July […]
Generating 2% – 4% in Bull Markets: How to Take Advantage of Out-Of-The-Money Strikes
The 3 required skills for covered call writing and selling cash-secured puts are stock selection, option selection and position management. This article will use real-life examples highlighting the first 2 of these skill sets in a bull market environment. Article assumptions and guidelines Portfolio is set up in a bull market environment Target goals […]
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Factors to Consider When Closing a Trade Early: A Real-Life Example with ATVI
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Position Management in the Final Week of a Contract: A Real-Life Example with FIVE
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Ask Alan 149 – How to Structure Portfolio Strikes
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Evaluating the Success of our Covered Call Trades
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Understanding the Impact Implied Volatility has on Delta
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The New Stock Market- Algorithmic and High Speed Trading
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Options That Expire Weekly and Conventional Expiration Cycles
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Why the 3% Guideline Applies to Puts but Not to Call Options
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Earnings Pre-Announcements Explained and Categorized
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Tax Implications of Writing Covered Calls against Long-Term Holdings
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Hoyt T Good evening Jay, I agree. This market has me f
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Barry B Premium Members, This week’s Weekly Stock Scr
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Alan Ellman Great crowd at my Denver presentation this morning
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Jay Good morning friends, Alan, I am with you, I wo
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Roni Joanna, most of the time I look at rolling out,
